All Forum Posts by: Michael Mcghee

@Johnny Khoury I beg to differ that most people are poor here. We have great homes and great cash flow that's why out of towners love to come and buy. Most people that can't get a good return in areas like California see areas in the Midwest as great opportunities. What if I said that most people don't buy in California because they are not rich enough and they come to the Midwest and take from the poor. Anyhow keep Memphis in your thoughts and prayers and keep supporting us. I will ask that please spend some of that cash flow on our hotels and restaurants when you visit and don't take all of it back to California. 

I love turning buzzards into Eagles. I typically don't like Eagles because that's where you get into multiple offers. Some things that are done while rehabbing will always remain the same. You will typically replace flooring, paint, etc. So give me that house that has that along with a pool with a tree growing in it. This way I can get the property for 15k cheaper while spending 3k to fill in and sod the yard over. Or give me that house that has a lingering roof leak that has rotted out a couple of joists. Once repaired it's good as new and sometimes only consist of minimal costs. So keep in mind you will pay more for the pretty girl. 

what were the exact prices of the three homes that were sold and rehabbed. You gave a broad range of 80-100s. This is important because it don't matter what he has it listed for, what have similar projects sold for? If it was hot as you say then you would have never received a counter offer, you would have received a highest and best.    Patience is a virtue and with this being your first one you can kick the tires a little more. Also with the 70% rule, the higher the property the higher the expenses on resale, holding costs, taxes etc. so be careful about just relying on the 70% rule alone. I don't know your financing situation but if cash or very strong financing then shorten your closing time and offer a non refundable deposit. Just a few items. 

would you mind posting the pdf?

@Sam Liu Area and price range will be a great start.

@Jeffrey Armstrong Your realtor could be on to something here. If you push too hard in the beginning they may accept another offer without those contingencies. To cover yourself, accept the contract but make sure you have an inspection contingency for 7 to 14 days. This will give you time to negotiate for those items and if they balk you can walk without losing earnest money. It's easier to get a seller to do something sometimes if it's standing in the way of a closing. In the beginning it's only the offer so you're negotiating from a different point of view.

1. @Shelton Powell add me to your buyers list. I buy in all areas. I will send info

@Marco Santarelli  @Jay HinrichsI apologize let me clarify by what I mean. That Fannie Mae product is offered to anyone that qualify. With that being said some other providers out there will not be willing to do what you're doing in vetting your clients. Therefore the bad apples will bring values down as a whole. With the credit default swaps it only took about 10 percent to be bad before the reinsurers had to pay. Think about it this way remember the 80/20 loans? Well they figured that 80% would be great and that left 20% equity. They knew the 20% would default at higher rates that's why those interest rates on the 20's were high. Well if they wasn't paying the 20 they also wasn't paying the 80. Instead of a loan I see the 20 in the form of equity. But like I said it's the bad ones that will abuse the guidelines. 

@Marco Santarelli @Jay Hinrichs Marco what I hate is that I understand that you guys do the right due diligence with your investors but it's unfair to someone like you when these products are offered to everyone. This can result in someone abusing the system and overfunding loans that should not have been funded in the first place. This will eventually drag the market down as a whole. Resulting in an oversupply and then that's when I buy on the rebound. Ok back to the script, no matter how much hard work you do on the front end that buyer has to be mentally prepared to weather any downturn. I suggest an aggressive principal pay down so they can have skin in the game. That 25% equity will get eroded fast. 

@Jay Hinrichs check out Fannie Mae's stock price. It's way down from over 18 months ago. Instead of regular deals they have a lot of these rate/ term refi products on their books. They are also constantly propping up the market by moving more reo's to auction.com and similar online or live sales. Therefore the deeper pocket buyers can buy the best products and the buyers that have to buy on the b-r-r approach with little to no money will get stuck if and only if they can't stomach coming out of pocket on a bad tenant run like you said. After a certain amount of loans it's not feasible for them anymore unless they go portfolio or hard money. Money will be more expensive albeit resulting in an even lower return.